CSL Reviews Non-Plasma Unit as Perreault Mulls Options

March 21 (Bloomberg) -- CSL Ltd., the world’s second-biggest maker of blood-derived therapies, is taking a hard look
at its non-plasma businesses as incoming head Paul Perreault
tries to assess their growth prospects.

CSL created a new unit, named bioCSL, in January to
encompass its vaccine, pharmaceutical and diagnostics
businesses. Their separation from the Melbourne-based company’s
CSL Behring plasma division will help identify their
profitability, Perreault said in an interview yesterday. The
assessment will probably take 18 months to two years, he said.

“We also want to make it clear to shareholders, is there
value here?” said Perreault, 56, an executive director who will
take over from Brian McNamee as managing director and chief
executive officer on July 1. “If there is, fine. If there’s not
as much value as we’d like, then what can we do to improve the
business, or are there better options?”

It’s “too early to draw any conclusions” about whether
the businesses, which include the Southern Hemisphere’s only
maker of influenza vaccine, will be sold or spun off, Perreault
said. The company, formed by the Australian government as the
Commonwealth Serum Laboratories during World War I, is the
country’s main supplier of snake-bite antidotes and vaccines for
Q-fever, a livestock disease.

National Significance

Any decision about the future of the businesses will need
to be weighed against their national significance, said
Perreault, an American who plans to maintain a home base in
Philadelphia and spend at least a third of his time in
Melbourne.

CSL fell 0.2 percent to close at A$58.75 on the Australian
stock exchange. The shares have risen 9 percent this year,
compared with an advance of 6.7 percent in the S&P/ASX 200
Index.

The company has yet to report earnings from bioCSL.
Pharmaceuticals and vaccines contributed 10 percent of CSL’s
$2.5 billion of revenue in the six months ended Dec. 31. Sales
of influenza vaccine, including to the U.S., were $97 million,
dwarfed by the $1.96 billion contribution from CSL Behring,
according to a company presentation.

A trend toward flu shots that protect against four seasonal
strains, instead of three, and potentially different vaccine
regimens for the elderly are among new challenges manufacturers
face, Perreault said.

“We have infrastructure, we have a flu plant,” he said.
“It’s not like we can just walk away. Let’s take a close look,
let’s do our due diligence and let’s understand where we are
with the business.”

Right Timing

The company hasn’t yet hired any outside consultant to help
with the review process, Perreault said.

“There is inherent volatility with the seasonal flu
business,” said Andrew Goodsall, a health-care analyst at UBS
AG in Sydney who has a neutral rating on CSL shares. “If you
arrive late in the season in the U.S., you risk not selling.”

CSL sells the Gardasil human papilloma virus shot, which
protects against cervical cancer, in Australia and earned about
$72 million in first-half royalties on Merck & Co.’s sales of
the vaccine outside Australia.

“Diversification does give them some alternative income
streams,” Goodsall said, adding CSL’s vaccine against pandemic
swine flu made a “materially high contribution to profit” in
the year ended June 2010.